Michael Burry has been bearish on Nebius (NASDAQ: NBIS) and thinks the AI infrastructure boom is running on assumptions the underlying economics can't support, according to media reports. Burry points to Nebius's compute contract pricing as the red flag. The stock is up nearly 210% year to date and 280% over the past year, crushing the S&P 500's gains over the same stretch.
Not just retail investors on Reddit love this stock. ChatGPT also added it among its top holdings. According to Rallies Arena, which gives AI models real money to manage in a live trading experiment, Nebius is among ChatGPT's top 10 stock picks, currently up 141.6% since the AI bought in.
Nebius builds and operates data centers packed with high-end GPUs and rents out that computing power to companies that need it to train and run AI models. Nebius recently posted quarterly revenue growth of 454% year over year and crushed analyst estimates. Adjusted EBITDA turned positive at $236.2 million, compared with a loss last year.
Nebius AI's own segment margin hit 50%. Cash from operations also turned positive, up from a loss. In Q1, the company had said it would end the year with 1 GW of capacity and up to $9 billion in ARR, implying pricing of about $9 million per MW.
But in Q2, it signed AI compute deals at more than $20 million per MW, more than double the prior baseline. Bulls believe Nebius has room to push pricing even higher, since new short-term and auction-based deals are already landing in the $40-50 million per MW range. The stock looks expensive on conventional metrics.
It trades at 53 times trailing sales and 20.5 times forward sales, compared with a sector median of 3.7 and 3.4 times, respectively. PE (TTM) is 1,690, and short interest is at about 25%. Short-term compute deals are priced about twice as high as midterm one- to three-year contracts, the opposite of how pricing usually works, where longer commitments get better rates.
Extract — continue reading at the source.
